Bond or Bonding

An amount of money (usually $6,000-$12,000) which must be on deposit with the governmental agency in order to secure a contractor's license. The bond may be used to pay for the unpaid bills or disputed work of the contractor. Not to be confused with a 'performance bond'. Such bonds are rarely used in residential construction. They are an insurance policy which guarantees proper completion of a project.

See also: Q&A: Contractor Profit and Overhead, Topics: A Field Guide to Bad Home Repair and Remodeling Contracts, WA L&I Hiring a Contractor